Trusts and NSW Land Tax

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From: Gordon Austin


I found this info on a web site. Is it definately the case that family trusts aren't eligible for the standard land tax threshold in NSW?

"These entities (eg Family Trusts) pay land tax at the rate of 1.7% for each $1 of taxable value, i.e. they are not eligible for the land tax threshold of $205,000."

GA
 
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Reply: 1
From: Dale Gatherum-Goss


Hi Gordon!

As you know, I'm in Melbourne not Sydney, but, I understand the rules to be that you only pay land tax if the value of the land is assessed as being more than $220,000.

Trusts under normal circumstances, will not have a problem.

I just confirmed this will the SRO in NSW.

Have fun

Dale
 
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Reply: 1.1
From: Gordon Austin


I found this attachment for those who are interested but I'm struggling to make sense of it.

GA
 
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Reply: 1.1.1
From: Waverly Bay


Gordon, this issue has been address in previous posts - but in summary : In NSW, land tax is imposed on the trustee of a discretionary trust owning NSW land. The land tax is calculated from the first dollar of taxable value of the landholding. The thresholds applicable to individual landowners do not apply to discretionary trusts.

However, as a matter of practice, the OSR does not send out land tax assessments where the land tax is less $100. ie if the total taxable value of the land holdings is <$5883, no land tax assessment will be sent.

Cheers

Waverly
 
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Reply: 1.1.1.1
From: Gordon Austin


Thanks - well I'll have to think carefully before buying too much property in NSW!

GA
 
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Reply: 2
From: Always Learning


So let say the "average" North Shore detached house is worth $800K; I guess $600K of it is land value. If held in a trust would one would need to pay $10200 PA and $6715 PA if held personally? Ouch!
<p>
Considering that currently North Shore property may be yielding a mere 3.5~4.0%PA (28K~32K) that's a big chuck of gross returns, lowering the gross yield from 3.5% to a miserly 1.8%. Then after the agents fees (8% of 28K= $2240), repair costs (2~3% of building value = $4000), council rates ($2000~$3000) etc. I suspect the net returns could be approximately 1% if fully tenanted. This is before taking into account the interest charges.
 
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Reply: 2.1
From: Gordon Austin


I'm led to believe that the rules relating to Land Tax anti-avoidance are that investment properties owned in your own name and a trust to which you are a beneficiary are lumped together. Does this mean that if you own a NSW investment property in your own name with land value of 200K and a NSW property in your trust with a land value of 300K you will also have to pay Land tax on the property owned in your own name?

Thanks in advance - Gordon
 
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Reply: 2.1.1
From: Tom Moschitz


Hi Gordon,

It may also be worth noting (please correct me if I'm wrong) for those wishing to minimise their NSW land tax bill that each separate entity is entitled to the threshold. As an example, a husband/wife team happy to purchase properties in individual names would have effective threshold is $440,000.

cheers,
Tom
 
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